‘Sometimes-Desperate’ Home Sellers Reduce Prices In DC
The Washington Post has this update on the DC housing bubble. “Misty and Steven DiPietro have had a for-sale sign in front of their house for 83 days now. A neighbor’s has been there seven months. Down the street, there are two more houses for sale, and around the corner, four more. The 20176 Zip code area, where their two-year-old house stands, has the highest number of homes for sale in the region.”
“What’s happening in 20176 reflects a dynamic at play throughout the region. Homes on average are sitting on the market longer, in many neighborhoods, much longer than they did a year ago. Those who study local real estate markets say the homes are lingering for two main reasons: because of a housing glut in areas where builders put up large developments during the housing boom of the past five years and because of buyers who are counting on better prices as the market cools.”
“The neighborhoods with the most single-family houses and townhouses for sale are concentrated in Loudoun and Prince William counties. The Zip codes with the most condos on the market are closer in, most notably in Northwest Washington, the southwest portion of Alexandria, northern Reston and Aspen Hill.”
“‘If I’m a buyer, I would probably come in and try to lowball me,’ said Steven DiPietro.”
“(In) Potomac Crossing, where the DiPietros live, people talk about the latest adventures of sometimes-desperate home sellers, with neighbors trading tales about how much the asking price was reduced, friends keeping track of each other’s foot traffic. But making a house stand out can be tough when three others of similar style, size and age are up for sale on the same block. When her real estate agent made follow-up phone calls to potential buyers, Misty DiPietro said, they could only vaguely recall her house. ‘It’s a little discouraging,’ she said.”
“The DiPietros are moving to a larger house in Hamilton, to be completed in December, and have shaved $20,500 off their original $650,000 asking price after watching neighbors across the street reduce theirs and get a contract for that amount.”
“Ken Wasserman sat lamenting just how quickly the real estate landscape has changed. The house next door, he said, sold in a week last summer for $700,000. Wasserman and his wife, put their house on the market in November for $716,000. They waited. And waited. Aware of developers offering tens of thousands of dollars in incentives on new homes in the area, the couple recently reduced the asking price to $680,000. Any nibbles? ‘Nothing. No offer,’ Wasserman said.”
“Chris Downs, 25, a potential buyer, is considering buying his second townhouse and renting out the first, which he bought in 2004. Downs plans on negotiating hard. ‘There are a lot of choices,’ he said. ‘When you look at these brochures, they’re just slashing prices.’”
“Alicia and Jeff Hennie, whose Columbia Heights condo hit the market Thursday with a $399,000 price tag, say they are prepared to wait it out, at least for a few months. Their one-bedroom unit is in the 20009 Zip code, which has the highest inventory of condos in the region. The couple is looking at a May 20 move-in date for a brand new condo downtown in the 20001 Zip code, another area with high condo inventory.”
“‘We don’t have to have it sold right away,’ said Alicia Hennie. ‘But we don’t want to carry two mortgages. We’ll see what happens.’”
And they will, wait, and wait, and wait, and wait. Then drop by a large amount when their 2 ARM/IO mortgages start choking them.
They are lucky to have any buyers roaming around. Some markets driven mainly by speculation have seen buyers vanish into thin air. Have buyers gotten smarter lately?
There aren’t many greater fools out there but a few are still around that think they will make a killing when real estate resumes its 20% per year appreciation. The full article has a story about a 25 year old who owns a townhouse and is looking to buy another one and rent out his old one. Good luck renting anything out for positive cash flow without a toxic mortgage. Doubling your exposure to the housing bubble just after the peak is financial suicide for a 25 year old, especially when he will surely have to use an IO ARM.
You make alot of assumptions; i.e. neg. on rental, I/O arm mortgage, etc. He could be fine. He bought at a decent time with extremely low fixed rates available. A rental for a 25yr old is great IMO.
Financial suicide? I think not. Buying at the peak does not spell financial ruin. Been there, done that - and lived to tell the story. I was in my 20’s and bought 8 properties at the last peak.
I just handed the newspaper to two twenty-something year-old coworkers, both of whom are under peer pressure to buy now. They scanned the article and both walked out of my office, mouths agape. Two young lives saved, I hope.
Buying in at peak, jees, what ever happened to “buy low and sell high.” Don’t fall for this DCB.
A rental for a 25 year-old is great, sure, if the numbers work. The negative “cash flow” on rentals at today’s prices will crush any 25 year-old, absent movie star income, for Christ’s sake.
The $399,000 one-bedroom in Columbia Heights in the article will rent for $1,500, tops, probably less. Tell you what, VA Investor, rather than buying that condo, why don’t you send me the downpayment funds, and I’ll hold the money for you, provided, you pay me $1,000 a month until the market bottoms out and returns to the current peak. At that point, I’ll give you your downpayment back, and I will never ask you to fix my toilet. Deal, or no deal?
I defer to your “expertise” D.C. too.
I defer to your “expertise” DC_TOO
You really are an idiot. What’s the matter, doesn’t the SDCIA board have a DC thread? Why not go start one?
Buying at the peak is bad, no matter which way you look, and is obvious to anyone. I don’t know why are you arguing otherwise.
“if the numbers work?” What the hell are you talking about? He’s 25. He bought in 2004. He couldn’t possibly have had a 20% down payment of $80,000. And even if he had a 20% down 30-yr fixed, the P&I would be what, $2,000/month? Plus taxes, plus association fees, plus reserve for repairs.
THE NUMBERS CANNOT POSSIBLY WORK! Have you lost your mind, VA_Investor? How can you say something like that?
Joe - I didn’t see any numbers for this guy’s townhouse. You are looking at the D.C. condo. We can’t make ANY analysis without the numbers.
Everyone has this guy in an option arm and negative and getting a Heloc. Pure speculation (no pun intended).
I agree with Va-Investor here. We don’t know what this guy’s numbers are on his “old” condo. We are speculating as to his condition. It is HIGHLY unlikely that he will be able to rent out his condo for positive cash flow, and it is HIGHLY likely that his condo is losing value, but we don’t know that.
That said, I still would not think it prudent to keep an investment that is falling in value. Why not sell the old condo, put the proceeds into an HSBC high yield savings account at 4.8% and then if need be re-buy that condo in the future if/when prices decline? One would come out ahead.
The thing I think is funny is this:
People start by saying their home is NOT an investment, it’s a home. Then they treat it like an investment (i.e. count how much it’s “worth” now and how fast it’s “appreciating” etc) but then when push comes to shove (it starts declining) they stop treating it like an investment again (i.e. they don’t bail out on a loser)
clouseau
This would put him “ahead” of where he would be by keeping an investment that is falling in value, even if it does have positive cash flow. not to mention save him a headache.
Clouseau - This is what he said:
“A rental for a 25yr old is great IMO.
Financial suicide? I think not. Buying at the peak does not spell financial ruin. Been there, done that - and lived to tell the story. I was in my 20’s and bought 8 properties at the last peak.”
Whether that is true or not, I do not know. Simple arithmetic, the kind we learned in grade school, dictates that buying “rental properties,” at today’s prices, in the DC-area is an exceedingly stupid “investment.” Even if one does so with cash, which no 25 year-old is capable of, barring inherited or ill-gotten cash, it makes no sense. 90-day T-bills pay better, period.
Things are alot more transparent today. My point, DC, is that buying at a peak does not automatically spell financial ruin. Obviously, IF this is the beginning of a large, long-term downturn, it is not the time to buy.
Unfortunately, I do not have your crystal ball. Even Shiller said today on CNBC that everyone should have some real estate exposure as part of a diversified investment plan.
I know that I can’t time markets. I can see warning signs. This 25yr. old wants to move-up and keep the old place. Sounds good to me.
buying at a peak does not automatically spell financial ruin.
So let’s see… From the history of the last RE cycle, in 10 years or so *maybe* he’ll break even. Stupid investment. CDs or MM would be a far better place for that money in comparison.
BUY LOW, SELL HIGH, not the other way around.
I don’t know why I bother taking the bait, but here we go. Buying a negative cash flow rental property as an “investment” is a contradiction in terms, period. It is not an investment, it is speculation that either sales prices or rents will rise, and soon, to cover the carrying costs. Our hypothetical 25 year-old makes what, $60,000? So, he’s in a 15% bracket with an AGI of about 50K. How the hell does he support himself while paying the carrying cost on his “investment?” The depreciation does him no good under his particular circumstances - the only thing that matters is the cash out of pocket, every month, without fail, or else. Would you recommend buying a stock which required its owner to pay a dividend to the company every month? Wow, there’s an idea. Let’s go by shares of Mr. Softy and we can all write a check to Bill Gates every month for the priviledge of holding our shrewd “investment.” Maybe some day the shares will go up, right? What part of this do you not understand? Or, are you saying DC-area real estate is on its way back up, as we speak? Why am I even bothering with this and what are you doing on the ‘net? Go out and buy more real estate, man, inventory is up 400%! There’s so much available! Go for it!
Maybe va investor is aware of something we’re not, for example, maybe it’s a fad popular with 25 year olds to burn greenbacks with cigarette lighters during their off hours. in which case, yeah, it would be better to buy real estate than (literally) burn cash. But if the 25 year old is not an idiot who burns currency, then gee, my little brain tells me he’d be better off doing something else with his money. call me crazy.
I humbly defer to all of you. How could I be so dumb?
The commutes from these outer suburbs are insane. Plus, tons of “fungible” housing stock out there.
OT - shiller (sp?) is about to come on CNBC to discuss hedging housing.
roflow
your going to havr 2 morts and like it, biatch
The couple is looking at a May 20 move-in date for a brand new condo downtown in the 20001 Zip code, another area with high condo inventory.”
“‘We don’t have to have it sold right away,’ said Alicia Hennie. ‘But we don’t want to carry two mortgages. We’ll see what happens
“If you change a comma, or a period, your listing pops up as having been edited,” he said. “It’s another way of keeping it in front of their face.”
__________________________________
This is another example of the idiots in the RE field, most rode the wave of success to a lifetime of earnings with ZERO knowledge and now they are so despreate to make a transaction they will make up anything no matter how stupid. LOWER THE PRICE!
Are mortgage documents public records in that area? Up here in Massachusetts, I can pull mortgage docs on anyone — as I regularly do in response to articles about Mass. Can someone reveal the extent of the fuckage these borrowers face?
I think the point is that none of these people can lower the price because they are ARM’d and HELOC’d.
Craven, do you have a website address? I would like to look up a few people myself.
In Massachusetts, you can find most county land records here:
http://www.masslandrecords.com/malr/index.htm
Although, some counties (like mine, Essex) are not linked on this site, and instead you need to dig them up. Essex, for instance, is at http://www.salemdeeds.com.
Have fun. Reviewing mortgage documents of friends and family is a lot of fun (and depressing!).
Thanks! Checked out a couple of my friends. This is fun.
HB Index charges down to a 52 week low…
http://www.marketwatch.com/tools/quotes/quotes.asp?symb=DJ_HOM&siteid=mktw
Don’t know what it’s like up north, but in SE Virginia, there are soooooo many new condos and subdivisions in the construction queue. Builders are now putting pictures of wood frames in real estate publications… presumably they’re concerned about getting to buyers while there are still some out there. Can’t help thinking the dire shortage of homes we had for a brief while has spawned massive overconstruction. Anybody have any concrete statistics on how much building is actually going on in various parts of VA?
Hmmmph! What happened to all those “high paying GOV jobs”. All the so-called experts were stating that this would keep everything at a permanently high plateau. I guess that Uncle Sugar is not paying that well.
ALL the fed employees/contractors who earned enough (and many that don’t earn enough) are part of the 60-70% home ownership rate floating this debacle. the remainder don’t make enough or didn’t buy into the hype of 10% YOY ever-appreciating RE.
20% YOY is the industry standard for true believers.
Almost no Federal worker earn enough to legitimately buy a $700K condo.
I’ve heard anecdotally that Uncle Sam is cutting back on those lucrative Accenture and KPMG-type consulting engagements because of all the $ being diverted to Iraq, Afghanistan, and New Orleans.
“‘We don’t have to have it sold right away,’ said Alicia Hennie. ‘But we don’t want to carry two mortgages.”
You either want it sold right away OR carry two mortgages. You can’t have both. Geesh!
I see a deposit being forfieted in their future.
“Chris Downs, 25, a potential buyer, is considering buying his second townhouse and renting out the first, which he bought in 2004. Downs plans on negotiating hard. ‘There are a lot of choices,’ he said. ‘When you look at these brochures, they’re just slashing prices.’”
Well hurry up and buy before the sellers lower prices any further Chris! Another real estate genius is born!
Chris “Real Estate Never Goes” Downs.
Time for some Chris Berman-style nicknames.
“‘If I’m a buyer, I would probably come in and try to lowball me,’ said Steven DiPietro.”
Thanks for the tip.
I like the 25 yr old who wants to buy another townhouse and rent his current one out. Upside down by a few hundred k before he’s 28 probably.
Maybe instead of buying real estate they should buy “The Wealthy Barber”, “The Richest Man in Babylon”, or similiar book. Spend $15 save a few hundred k. Best investment return ever. Buffet would be jealous.
“The Richest Man in Babylon” is awesome. I was sure glad to see a synopsis in some compilation a few years ago. It’s one of the best books on personal financial management. They should pass it out at middle (I wish) or high school graduation as required reading.
I buy a copy of “Richest Man” for every 20-something and teenager I know. Sometimes I just leave it on a desk without saying I was the benefactor.
Cool, Steve, I’ll offer ya $250K. That low anough for ya?
OT: Sales continue to slow substantially in the San Fernando Valley. Since the holidays the number of homes going to a pending status has continued to rise week after week, as it should during this time of year. The number of homes going pending should rise til about May, then hold stead until about June/July when it start to taper off into the fall.
Well…. suddenly around the beginning of April, pending sales began to slow, and slow and slow. This should not be happening this time of year. We are now back to the level of pending sales we were seeing near the end of this past JANUARY (a very very slow month, and this years was the slowest since ‘97).
Something has shifted. I don’t know if buyers are getting cold feet, or having trouble qualifying for these outrageous prices, or what. But, if this keeps up, we could see panic in the fall.
Thanks for the update . . . keep SFV updates coming.
Reminds me of what was pointed out by Jim Klinge who posts here from time to time and has a “bubbleinfo” web site. He said the trend is that the Spring selling season has been getting shorter and shorter in the last few years. A brief window of opportunity. The very smart ones priced the market down early. But sadly there weren’t very many of those!
The spring selling season already ran out of gas here, if you ask me. The Jim ratio is going to hit 4.0 in the next couple of days. I hate being right.
What is the Jim ratio? 4.0???
Listings to pendings, I believe.
Current active listings/pending listings is correct.
If you click on my name it takes you to the bubbleinfo website, where by clicking on Statistics 2006 you see an explanation and tracking of the ratio over the last few months. It’s a way to measure the health of the market - in the good old days (1998-2004) it ranged from 1:1 to 2:1, today it’s close to 4:1.
The people buying in the D.C. area are using money made in the RE boom. There are very few first time buyers. They are just pushing paper around.
Lot like the whole Enron affair in Houston. People just pushing money around… thinking somehow that activity is inherently valuable and should make them rich.
If no new first-time homebuyers are entering the market, the bubble cannot continue.
If no new first-time homebuyers are entering the market, the bubble cannot continue.”
I can not agree more. I have been telling people this for several years now. Real Estate is like a conveyor belt pointing upward. People climb onto the base of it, and over time, they move upward. But if you lift that belt up off the ground, the only ones moving upward are the ones already on it (unless, of course it jams, in which case, no one moves). The people on the ground have no way to jump onto the belt, and the whole chain is eventually broken.
Regarding the 25 year old. I do agree that we aren’t in a position to criticize him since we have no idea what his financial status is. I’ve seen far too many younguns out there floating mortgages off of daddy’s back. And some just happen to have a lot of money. So who knows? I will say this, though. He is too young to have experienced a downturn in a market. All he has probably witnessed and heard about is talk of continual growth and how real estate is and always will be a sure thing.
I’ve been through ups and downs in markets. I saw my hometown in the midwest go from prosperous to 21% unemployment. Want to talk bust? Every other house was on the market! People couldn’t give them away.
I also lived through several busts in Austin, despite the fact that it’s a very desirable place to live. I can recall entire developments in foreclosure. I remember developers slashing prices to the bone on brand new homes in new subdivisions right next to their previous developments where they sold homes at 30% or more just a year earlier. I can recall seeing long lists in the real estate section of the newspaper of houses in foreclosure. But what absolutely amazes me about DC is that people here will tell you flat out, “DC is unique and that will never happen here.” Bull! It has before and it will happen again.
re: the 25 yr old. I would estimate exit and re-entry costs of at least 10%. I would further guess that this guy has an excellent 30yr fixed rate loan. What will rates be upon re-entry? Assuming he has the exceptional foresight of DC_Too and he buys back in at the bottom, at what interest rate?
Assume he plans to keep this place until it is paid for. He will be in his early 50’s. If his negative is not unreasonable, this is not a bad plan. Let a tenant pay off his mortgage.
Are there better investments? Probably. But I know that I am not smart enough to predict the 100% best way to go. Perhaps he has other investments and wants to diversify.
In the 90’s, rents did not drop around here.
From the people I know in the area, this is true. The ones who bought, did so by cashing in on their RE boom increases, while the ones who didn’t buy, like me (and it seems there are more of us) are thinking of completely getting out of the area altogether — as in another state.
I’m a potential first-time buyer, but there’s no way I’m buying in this overvalued market.
OT, but Rich Dad, poor Dad Robert Kiyosaki writes that the RE bubble ended in 2005 and he is now promoting silver.
I think silver is a good bet. Any commodity but gold is a good bet.
HI Michael,
Your observation is interesting. Will be thankful you or anybody else can second this and explain why. I have been watching gold but not able to enter. ALways was getting some feedback here and there that it is the hedgefund buying most….
Thanks
Over the past 12 months gold has been a great bet. But now it may be approaching bubble status. When the general media publishes on it and your co-workers know the price of gold, it’s time to bail.
Gold is simply too loved. Why buy gold when just about every other commodity has the same upside and less downside?
I am not sure that gold is a bad bet. There is significant data that gold to reach the Bubble values of 1980 ($850/oz)would have to reach ~ $3,000/oz in todays inflated dollar. There was a previous post on this site that had a graph of end of the year gold prices vs median home price - I wish I had saved it because that chart suggested gold of >$2,000. Silver is an industrial metal and in booming manufacturing economies will increase in value, but when a recession or inflation or stagflation sets in silver drops (unless the Hunt brothers or their equivalent try to corner the market).
I’m not sure it’s a bad bet, I just think that it’s not as good a bet as other commodities.
Try running a Google search on Robert Kiyosaki and Amway.
The 25 year old is underwater on his condo even if he bought it years ago. IF the MV is 400K and you rent it for 1500 a month, that makes NO SENSE, unless you expect the price to increase. You’d be better off in a CD.
sure, but all this is driven by the leverage lust I think. I mean, 25 year olds, no matter what they actually ‘earn’, growing up as they have in a culture where gambling of all sorts surrounds them constantly and where there’s likely the bank of mommy daddy and grandma always close at hand, where even bankruptcy leaves you screwed for a maybe a bunch of years but hell not more than a decade….balanced against the possibility, nay, the likelihood given the only history they’ve experienced, of easy riches…as nike says, go for it. What wusses would go with cds? how can 5% on 10K compare with even a mere 5% (and of course that paltry return can’t last long, right?) on 400K?! Are you nuts?!
I’m pretty sure that if you asked this guy, he’d tell you that sure it might not be positive cash-flow, but that’ll just be for a while, maybe a couple years, til this temporary inventory problem corrects itself and then he’ll be all set again. I’m not really worried about the guy himself so much as how this reflects what 25 year olds dream of these days.
I live in the zip code mentioned here (20176), but in Lansdowne. Potomac Crossing is a blight - a bunch of ugly vinyl tract houses squeezed together on tiny plots. Homes there are worth maybe half the $650K these people are looking for — the whole area has been completely overrun with speculators.
“The DiPietros are moving to a larger house in Hamilton, to be completed in December, and have shaved $20,500 off their original $650,000 asking price after watching neighbors across the street reduce theirs and get a contract for that amount.”
Classic chase-the-market-down scenario.
These morons will chase the market all the way to the bankruptcy court.
So this post is my take on the housing bubble in DC, including a list of index articles from major newspapers at the end - http://delaselva.livejournal.com
OT - but fantastic article re: Helicopter Ben’s “true” intentions regarding further rate hikes:
http://www.msnbc.msn.com/id/12583997/
________________
Market uproar follows Fed ‘misunderstanding’
Stocks fell on Monday after CNBC’s Maria Bartiromo revealed on air that Ben Bernanke felt his testimony last week had been “misunderstood.”
The anchor said Mr Bernanke had told her at the White House Correspondents’ dinner in Washington on Saturday that he had not intended the markets to infer that the Fed was nearly done raising interest rates.
“I asked him whether the markets got it right after his congressional testimony and he said, flatly, no,” Ms Bartiromo said. She was reporting live from floor of the Chicago Mercantile Exchange and the resulting trading roar almost drowned out the rest of her remarks.
The tabular content relating to this article is not available to view. Apologies in advance for the inconvenience caused.
She added: “He said he and his Federal Open Market Committee members were basically trying to create some flexibility for the Federal Reserve, saying the Fed may pause but the data will really dictate whether more rate hikes will occur.”
The S&P 500 fell 0.7 per cent and the Nasdaq Composite lost almost 0.9 per cent. Stocks had rallied on Mr Bernanke’s testimony last week, which was interpreted as signalling a probable pause in the Fed’s series of rate rises after its May meeting.
“It comes off as a great example of over-communication and a possible attempt to over-fine-tune, assuming he was willing to go on the record with these comments - CNBC is not the Fed’s obvious port of call to correct market expectations,” said Alan Ruskin, strategist at RBS Greenwich Capital.
The Fed declined to comment.
I watched a replay of her commentary w/the Chicago Mercantile Exchange in the background. It was hilarious to watch the din on the floor raise behind her during her commentary as the market tanked. At one point she even turned around and made a comment about the excitement on the floor, not having a clue that her remarks are what caused it!!!!
Maria is, in fact, a moron.
Now you learn how the world really works, she might not be bright, but she cultivates a ton of sources because she looks at them with those big doe eyes and gets more info from them and info is everyting in investing. “Oh was that lil’ ole me who caused all that fuss?”, please.
You ever thought that she exactly knew what her statements would cause, and did the casual turn around on the floor wondering what was going on, to pull you in as a viewer - i.e., she’s getting what she wants, which is greater viewership ?? Sometimes the dumb acting people are the smartest ones in the room.
oh doubtless she knew! how could she not, c’mon. Call her a moron all you want, but I’d guess there’s no way ‘morons’ get to where she’s gotten, and even if she’s not going to be invited on as CEO or staff economist anywhere soon, her job surely means she knows what effect ‘buzz’ has on markets, puleeze.
If she managed to come off like she really didn’t connect her claims that Bernanke says he was misunderstood to near-simultaneous market action then she’s also a brilliant actress!
Best lookin’ moron on TV.
Take off the make up and it would be scairy. She went from arrogant “know it all” in 2000 to cutsie and modest. Arrogant is coming back. We’ve topped stocks again.
Inventory is swelling in DC Metro area.
See my post:
http://bubblemeter.blogspot.com/2006/04/washington-dc-active-listings-increase.html
“The neighborhoods with the most single-family houses and townhouses for sale are concentrated in Loudoun and Prince William counties”
Loudoun county active listing inventory up over 400% from March 05 to March 06. Prince William County up almost 500% from March 05 to March 06.
David
http://bubblemeter.blogspot.com
I find it trememdously ironic that a few Realtors talk about “reducing” prices $20K-30K and homebuilders offering “SAVE $100K” just this weekend only. If I remember correctly the “schtick” the pro’s use to talk a seller down in list price was that you are not “reducing” your price by $30K as if you are ” losing $30K” , because “you never had it.” When builders offer incentives and reduce prices to help consumers “save” it makes me want to puke on their front lawn.
Thebrand new NAR website blog talks about how important Realtors are in saving clients money,(true in some instances) moreso in establishing prices. And yet, today, there is talk out side of the mouth about “sellers” being greedy, thus the need to drop prices? Who was giving them the advice to price? This is the ultimate irony.
“If you change a comma, or a period, your listing pops up as having been edited,” he said. “It’s another way of keeping it in front of their face.”
Love it, I thought a Realtor was an honest profession.
What our dear 20 something friend is foolishly attempting to do is the age old practice of “doubling down”. If you really have concrete research to back this up and a conviction that the market “has it all worng” then yes, this can be a good long term strategy. FOR STOCKS! Common stock has no carrying cost (and the first guy to bring up the $35 IRA fee gets it). Doubling down or dollar cost averaging in this instance only compounds the problem.
DinOR - I think the process of doubling down is going to wipe away a lot of equity built up during the boom. I know a number of folks who rolled their equity into an even bigger more expensive homes. Even if prices decrease a little, say 10%, the additional leverage they are taking on is going to eat up whatever equity they had.
or people borrowing equity out of their home as a down payment on a purchase on an investment property. They are going to learn firsthand the ugly downside of leverage.
McLean, VA looks like it is turning into a killing field. I rent a 2br for $1,400. It is large, includes a balcony, and has a great backyard. Now I can move across the street where they are building new condos from $800,000 where I can have a great view of a water tower and have no yard around the place because the building takes up the majority of the lot, which was not big to begin with.
When llloking for a new place to live, we visited the Lansdowne area. Tons of homes, but no supermarket.
$399,000 for a condo???? Maybe in beverly hills.
Nope, that would be $700K (and up).
What you don’t know, Lingus, is what “Columbia Heights” means. It has got a lot better in recent years, but there are sections that are still very sketchy. Salvadorian drug dealers, machete attacks, that sort of thing. Lovely, really.
From the original Washington Post article,
> those neighborhoods now are seeing an explosion of condos for sale
I must say I love the imagery here - an *explosion* of condos?! It may well come to that, before it’s all over.. sigh.
Where’s our resident “XXXXX for everyone” dude, right when we need him?
va_investor> I was in my 20’s and bought 8 properties at the last peak.
My sympathies. We were all young and headstrong and foolish once.. well some of us, anyway. And yet, you advise today’s youth to repeat your mistake? I don’t understand you.
Michael Anderson, why would you consider gold a bad bet and silver a good bet? I myself have been bullish on both since the early 90’s - and wrong until 2000 or so. Didn’t hurt though, considering the recent runup.
I have no special insight on gold. Read Rogers “Hot Commodities” for better insight to why other commodities are superior. He has better insight into the matter than I ccould ever hope to have.
To me the gold fever reminds me of the Nasdaq bubble of 2000 and the current housing bubble. I think gold is the next bubble to fall after the housing. There may be those who time it just right, but I don’t see the point when all the other commodities are available.
Gold appeals to people who are much more pessimistic about the world than I am. I’m an optimist about the future (just not about housing prices). Guess what? If the world gets to the point where we barter for food with gold and we need guns to protect our gold, a skinny 6′6″ near-sighted geek who is dependant on daily blood-pressure medication is a goner anyhow. My bet has to be on doing well in a bright tomorrow. Dystopia wouldn’t suit me.
There are several ETFs that cover a whole basket of commodities. Buy one of those as part of your security blanket.
OK, fair enough. You’re right, Jim Rogers is not a big fan of gold either - but even *he* recently conceded that $1000 gold is not too far out in the future. He just thinks he can make far more money in other commodities, more power to him. My own perspective is, it’s much simpler to stash a bunch of bullion coins than trade corn futures. Among other things, I don’t have to worry about the coin shop going bust after I’ve taken delivery of the coins - zero systemic risk. Not true of a piece of paper promising me 10,000 pork bellies (or whatever) in December.
Also: not all gold bugs (myself included) are anticipating the end of the world. In the last runup, gold went from the Government-rigged price of $35 to $800+, and life just carried on with substantially debased paper currency. The sad truth is, your average citizen simply doesn’t comprehend the scale of the wealth transfer that’s being perpetrated via inflation. If gold eventually ends up trading at twenty times its recent major bottom ($252), that wouldn’t be the first time in recent history. By then, I’d have sold “too soon” in all likelihood - and moved on to another undervalued asset.
Those who study local real estate markets say the homes are lingering for two main reasons: because of a housing glut in areas where builders put up large developments during the housing boom of the past five years and because of buyers who are counting on better prices as the market cools.”
Wrong. Housing are lingering for one and only one reason: The asking price is too high.
Reduce the price and you will sell more houses. Period.
I want to be clear here. Yes, more supply and less demand will mean lots of unsold houses at the old price. But typicially the old price doesn’t persist because of the large inventories.
So the real story here isn’t a shift in demand or a shift in supply. The real story is the fact that prices haven’t adjusted downward yet.
Now, I believe that they will soon enough, to some degree. But as everyone says, prices are downward sticky. I think it may take some “educating” of sellers to show them how much they are losing by waiting (maybe a “Sell now vs. Sell later Calculator” that is similar to Rent vs. Buy Calculators?)
[sigh] This is getting so old … all these people expecting to be somehow blessed & exalted just because they have a house to sell. Looky here: my wife and I lived from ‘75 through ‘99 on the Eastern Shore of Maryland, very desirable location just a couple of miles from the Chesapeake Bay. Our home took nine months to sell when we moved to New Mexico and appreciated only ten percent over 13 years at the time we sold. My realtor was surprised it sold at all. That was NORMAL for the area then. I knew someone whose house had been on the market for THREE WHOLE YEARS. Is anybody listening???
The last few years of housing market froth are totally abnormal and have no basis in reality. A house is not an “investment,” it’s a place to live. What we’ve seen most places since 2000 has been a politically generated phenomenon to disguise the wholesale raid on the U.S. Treasury by the current gang of pirates. Any discussion of housing that leaves out politics is just silly.
As for those D.C. homeowners, to hell with ‘em. They bought into a lie.
one thing in DC to consider is the increasingly insane travel situation, where basically if you live in the suburbs you are screwed with the high gas prices and total lack of a competent road system. This would seem to augur well at least for properties around the Metro. Here in Alexandria, properties around the Metro are actually holding up well and in some cases are still going up.
Now some of the areas in DC (like Columbia Heights, Shaw, and the new redevelopment near the proposed stadium) could be considered “questionable”